Moutreuil v Andreewitch & Anor

A contempt finding for breach of a freezing order depends on the proper construction of the order and proof, to the criminal standard, that the respondent deliberately performed the prohibited act. It is unnecessary to prove that the respondent intended to breach the order or knew that the conduct amounted to a breach where the adopted interpretation was not reasonably arguable. Legal advice does not provide a defence, although the respondent’s state of mind, motives and bona fides may be relevant to mitigation. A party who considers that compliance is impracticable should seek variation of the order.

The claimant sought findings that the defendant had breached a freezing order made in related family and civil proceedings concerning shares in, and property owned by, a company. The order prohibited dealings with the shares, property and the company’s other income or assets, subject to liabilities of the company. The defendant accepted making payments from the company’s account but argued that they were salary, repayment of loans, company legal fees or necessary living expenses. The central issues were whether the payments fell within the exception for the company’s liabilities and whether the committal application was procedurally defective.

1. Procedure and applicable standard. The application complied with the relevant requirements of the Family Procedure Rules, including the requirements concerning the application, service and penal notice. The court rejected the objection that the application failed to state individual payment dates because the alleged breach concerned withdrawals over a defined period. The court applied the criminal standard of proof.
2. Construction and mental element. Whether a freezing order has been breached turns on its proper construction. In accordance with Pan Petroleum AJE Limited v Yinka Folawiyo Petroleum Co Ltd [2017] EWCA Civ 1525, it was unnecessary to prove that the defendant intended to breach the order or believed that his conduct constituted a breach. It was sufficient that he deliberately performed the acts in question on an interpretation of the order that was not reasonably arguable. Reliance on legal advice was no defence, although state of mind, motives and bona fides could affect penalty.
3. Application to the payments. The payments were not shown to be liabilities of the company. There was no reliable documentary evidence of an agreed salary, loans repayable on demand or legal fees incurred by the company. The defendant’s personal rent and living expenses were likewise outside the exception. The court found the explanations incredible and concluded that the defendant knowingly used company money in breach of the order.
4. Disposition. Findings of deliberate breach were made. The claimant did not seek committal at that hearing, and consideration of sanction was adjourned to allow the defendant an opportunity to purge the contempt, following the approach in Reilly v Shamrez [2019] EWHC 3112 (Fam) and Shokrollah-Babaee v Shokrollah-Babaee [2019] EWHC 2975 (Fam).